Lessons from a week on Wall Street

I spent last week visiting fifteen companies in New York, New Jersey, and Connecticut to learn more about professionals working in all areas of finance. Along with eleven other students, I met with analysts, associates, managing partners and directors, SVPs, CIOs and CEOs from investment banks, venture capital firms, international corporations, boutique trading firms, consulting divisions, and personal wealth advisory enterprises.

The experience had a profound impact on my educational goals and expected career path. Our hosts were very informative and inspirational across the board. Here are some key takeaways from our discussions:

  • As an intern, come in early, show intellectual curiosity in every aspect of your work, and offer to help with any project even if it is outside your sphere.
  • Volunteer for the “bad” assignments at work. You will gain new experience and stand out!
  • Financial modeling is a transferrable skill between many roles.
  • Send a nice, specific thank-you letter if you’re going to send a thank-you.
  • Consulting firms place value on extracurricular involvement and teamwork, and seek to hire empathetic individuals. High GPA is important to them, more so than it is to investment banks. Change-agility is the best trait for consultants.
  • Consulting can be entered at any level, including entering as a partner later in your career.
  • In interviews, the ability to quickly analyze a company using a measure like EBITDA given simple numbers is valuable.
  • Set yourself up for success. Find a mentor and begin thinking ahead. Ask yourself questions like, “Do I have a consuming passion for finance?”
  • Take the GMAT while still in school.
  • Start a Roth IRA now.

These comments were each echoed by multiple professionals when expressing their recommendations for college students.

On the financial side, I learned that:

  • Debt from private schools tends to default at a higher rate because of their lower entrance criteria.
  • Canada’s cost of production for oil is around $60/barrel, whereas South Texas produces at around $30/barrel and Saudi Arabia’s cost is under $10/barrel.
  • New banking regulation has placed capital requirements on commercial banks, but as the capital requirements don’t apply to hedge funds, a new form of risky lending by hedge funds has begun.
  • Subprime lending levels are at the same level as 2007; not bad in and of itself, but we need to be cautious of creating leverage on leverage on leverage. Increased interest rates are necessary to put the brakes on an overheating economy.
  • Shadow banking is gaining traction because capital is moving to unregulated areas.
  • The greatest value of a publicly traded venture capital firm is permanent capital.
  • A personal wealth management firm adds value beyond an actively managed portfolio, including managing a will, educating clients and setting risk tolerances, and purchasing securities not available in indices. These firms may hold some cash waiting for a big opportunity.

Till next time New York!